Virgin Orbit Receives $17M Aircraft Bankruptcy Offer From Stratolaunch

Bankrupt rocket company Virgin Orbit has received a $17 million “stalking horse” bid for its modified 747 carrier jet and other aircraft as it continues to evaluate options during the Chapter 11 court case.

Virgin Orbit has agreed to the terms of the potential aircraft deal with aerospace company Stratolaunch, which is developing the world’s largest aircraft, called the Roc, as an airborne platform for hypersonic flight testing. A stalking horse bid represents the first attack on an insolvent company’s assets and effectively sets the minimum bid for potential competing offers.

According to bankruptcy filings released on Tuesday, the stalking horse agreement followed “hard-fought negotiations” between the companies. Under the deal, Stratolaunch will purchase Virgin Orbit’s aircraft for cash, with the buyer making an immediate $1.7 million deposit in escrow if the deal is closed.

Virgin Orbit filed for bankruptcy protection on April 4 after the company failed to secure a lifeline and laid off nearly its entire workforce.

“Stratolaunch is continually evaluating how we can increase our capacity to meet customer demand while ensuring our country has the capability to accelerate hypersonic technology through leapfrog flight demonstrations,” the company said in a statement.

Stratolaunch is owned by Cerberus Capital Management, which bought the company in 2019 from the late Microsoft co-founder Paul Allen’s Vulcan.

Cerberus previously wanted to privatize Richard Branson’s ailing rocket company and was among the potential bidders closest to a deal but ultimately fell through, according to a person familiar with the late-stages of Virgin Orbit’s attempts to avoid bankruptcy.

Cerberus officials did not respond to CNBC requests for comment on the private talks. A Virgin Orbit spokesperson declined to comment on the potential Cerberus deal, but said in a statement that the company “is pleased that the number and quality of expressions of interest reflect the innovative ideas and hard work that the team put into the development of this deal.” unique system.”

Virgin Orbit previously announced that it had received “over 30 expressions of interest” during the bankruptcy proceedings and that the company was still looking for a wholesale deal.

A bankruptcy auction is scheduled for Monday. A court hearing is scheduled for May 24 at 2 p.m. ET to approve the findings.